Citation Nr: 0324865
Decision Date: 08/04/03 Archive Date: 10/02/03
BOARD OF VETERANS’ APPEALS
DEPARTMENT OF VETERANS AFFAIRS
WASHINGTON, DC 20420
DOCKET NO. 02-12 998A ) DATE AUG 04, 2003
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On appeal from the
Department of Veterans Affairs Regional Office in Atlanta, Georgia
THE ISSUE
Entitlement to a waiver of the recovery of an overpayment of Department of Veterans Affairs non-service-connected pension benefits in the amount of $4,826.40.
(The issue of whether new and material evidence has been submitted to reopen a claim for service connection for cardiovascular disease, to include hypertension, is the subject of a separate appellate decision.)
REPRESENTATION
Veteran represented by: The American Legion
ATTORNEY FOR THE BOARD
R. T. Jones, Counsel
INTRODUCTION
The veteran had active service from July 1967 to July 1969 and from April 1971 to January 1977, and had additional prior service in the Army Reserve.
This matter came before the Board of Veterans’ Appeals (Board) on appeal from a May 2002 decision by the Department of Veterans Affairs (VA) Committee on Waivers and Compromises (Committee) at the Regional Office (RO) in Atlanta, Georgia.
FINDINGS OF FACT
1. In June 2000, the veteran was granted non-service connected pension and he was thereafter advised of the necessity for reporting income from all sources and any changes in family income or net worth promptly.
2. The appellant was overpaid pension benefits in the calculated amount of $4,826.40, as a result of undisclosed income. The amount of the overpayment is not in dispute.
3. The appellant's failure to provide information to the VA concerning receipt of additional family income is not shown by the evidence of record to constitute "fraud," "misrepresentation of a material fact," "bad faith," or "lack of good faith."
CONCLUSION OF LAW
The overpayment was not created through fraud, misrepresentation of a material fact, or bad faith on the part of the veteran. 38 U.S.C.A. § 5302 (West 2002); 38 C.F.R. § 1.962(b) (2002).
REASONS AND BASES FOR FINDINGS AND CONCLUSION
Background
The basic facts are not in dispute. The veteran’s original application for pension benefits, VA Form 21-526, was received in January 2000. At that time he reported that he and his wife had no income. He reported that he had worked until September 1999 as a self-employed truck driver and that he had completed 9th grade. In June 2000 he submitted a copy of a Social Security Administration (SSA) award letter showing that he was entitled to disability benefits beginning in March 2000.
In June 2000, the RO granted non-service connected pension benefits effective from September 1999.
By letter dated in July 2000, the veteran was advised that his receipt of pension benefits was directly related to his countable income or net worth, and of his responsibility to promptly report any changes in his income or net worth and that when reporting such income, he was to report the total amount and source of all income received. The letter also informed the veteran that the rate of payment was based on family income.
The record shows that the veteran was notified in February and July 2001 that his pension payments had been amended and that his award was based on family income and of the importance of accurately reporting all income to VA for purposes of his continued pension eligibility.
In January 2002 the RO notified the veteran that his pension payments had been amend base on receipt of additional income. This and subsequent amendments resulted in the overpayment.
In February 2002 the veteran requested that the VA stop payment of his pension benefits, and in April 2002 he reported that his wife had earned income between May 2001 and January 2002 working in a temporary clerical job.
In May 2002, the Committee determined that the veteran acted in bad faith in his failure to report changes in income. Thus, waiver was precluded.
In an August 2002 statement the veteran indicated that he did not intend to defraud the government.
Analysis
During the pendency of the appeal, the Veterans Claims Assistance Act (VCAA) was enacted and became effective. 38 U.S.C.A. §§ 5100, 5102, 5103, 5103A, 5106, 5107, 5126 (West 2002). Regulations implementing the VCAA have also been published. 38 C.F.R. §§ 3.102, 3.156(a), 3.159, 3.326(a) (2002); see also 66 Fed. Reg. 45,620-32 (Aug. 29, 2001). The VCAA and implementing regulations do not apply in waiver cases because the statutory right to request waiver of recovery of indebtedness within Chapter 53 of Title 38 of the United States Code contains its own notice provisions. See Barger v. Principi, 16 Vet. App. 132 (2002); see also 38 U.S.C.A. § 5302 (West 2002). Regardless, the RO has advised the veteran of the evidence necessary to substantiate his claim during the course of this appeal. For example, he was advised of the applicable law and regulations and, in essence, the deficiencies of his claim in a September 2002 statement of the case. In addition, the veteran has been provided with ample opportunity to present evidence and argument in support of his claim.
Under applicable federal regulations, a veteran, surviving spouse or child who is receiving pension must notify VA of all circumstances which will affect his or her entitlement to receive, or the rate of, the benefit being paid. 38 C.F.R. § 3.660(a)(1).
The law precludes waiver of recovery of an overpayment or waiver of collection of any indebtedness where any one of the following elements is found to exist: (1) fraud, (2) misrepresentation of a material fact, or (3) bad faith. 38 U.S.C.A. § 5302(c).
A debtor’s conduct is deemed to constitute bad faith “if such conduct, although not undertaken with actual fraudulent intent, is undertaken with intent to seek an unfair advantage, with knowledge of the likely consequences, and results in a loss to the government.” A debtor exhibits lack of good faith where the debtor’s conduct shows an “absence of an honest intention to abstain from taking unfair advantage of the ... Government.” The Board also notes that any misrepresentation of material fact must be “more than non-willful or mere inadvertence.” 38 C.F.R. § 1.962(b) (2002).
Initially, the Board notes that the amount of the overpayment is not in dispute. After a review of the evidence, and the contentions presented by the veteran, the Board finds that the veteran’s actions in the creation of the overpayment do not satisfy the criteria for a finding of fraud, misrepresentation, or bad faith on the part of the veteran in the creation of the overpayment.
The Board does not find the necessary intent on the part of the veteran that satisfies the criteria under 38 C.F.R. § 1.962(b). This does not mean that the veteran may not be found at fault in the creation of the debt, but merely indicates that the acts, which led to its creation, do not meet the high degree of impropriety as to constitute fraud, misrepresentation, or bad faith. The evidence reflects that while the veteran initially provided evidence regarding income, he did not thereafter submit more detailed information regarding any changes in his income. The Board notes that the earnings of his wife were based on temporary employment. The Board finds while he delayed in notifying the VA of the change in income, it is very conceivable that there was no intent to deceive the government regarding his income. Also, he did he actively misrepresent his income.
Thus, the Board finds that the evidence revealed in this case does not support the conclusion that waiver is automatically precluded based upon the veteran’s actions, and waiver is not precluded under the provision set forth in 38 U.S.C.A. § 5302(a).
ORDER
Waiver of recovery of the overpayment of pension benefits is not precluded by a finding of fraud, misrepresentation, or bad faith and to this extent only, the appeal is granted.
REMAND
The next issue which must be addressed is whether collection of the current debt would be contrary to the principles of equity and good conscience. If there is no indication of fraud, misrepresentation, or bad faith as in this case, recovery of the overpayment of benefits under laws administered by the Secretary of Veterans Affairs is prohibited if the Secretary determines that recovery would be against equity and good conscience. 38 U.S.C.A. § 5302(a); 38 C.F.R. § 1.965 (2001).
The RO has not had the opportunity to consider this aspect of the veteran’s claim. Also, on the most recent Financial Status Report the veteran indicated that he owned a truck worth $31,000 and that monthly payments of $750 were being made by his disability insurance yet the source of said disability insurance was not listed as part of his income nor elsewhere identified in the current record. He further listed payments including homeowner insurance, but listed no real estate assets or mortgage or rent payments. He indicated monthly income of $386.00 from pension, compensation, or other income. However, he did not specify the source as requested. A more complete Financial Status Report is necessary.
Accordingly, and to ensure due process of law, the case is REMANDED to the RO for the following action:
1. The veteran should be provided with VA Form 20-5655, Financial Status Report, to submit in support of his waiver request. He should be requested to provide complete responses to each particular noted therein.
2. Thereafter, the Committee should readjudicate the veteran’s claim, applying all of the factors pertaining to the standard of equity and good conscience. If the benefit sought is not granted the veteran and his representative should be furnished a supplemental statement of the case and an opportunity to respond. The case should then be returned to the Board for further appellate consideration.
The veteran has the right to submit additional evidence and argument on the matter or matters the Board has remanded to the RO. Kutscherousky v. West, 12 Vet. App. 369 (1999).
This claim must be afforded expeditious treatment by the RO. The law requires that all claims that are remanded by the Board must be handled in an expeditious manner. See The Veterans’ Benefits Improvements Act of 1994, Pub. L. No. 103-446, § 302, 108 Stat. 4645, 4658 (1994), 38 U.S.C.A. § 5101 (West 2002) (Historical and Statutory Notes). In addition, VBA’s Adjudication Procedure Manual, M21-1, Part IV, directs the ROs to provide expeditious handling of all cases that have been remanded by the Board. See M21-1, Part IV, paras. 8.44-8.45 and 38.02-38.03.
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ROBERT P. REGAN
Veterans Law Judge, Board of Veterans’ Appeals
IMPORTANT NOTICE: We have attached a VA Form 4597 that tells you what steps you can take if you disagree with our decision. We are in the process of updating the form to reflect changes in the law effective on December 27, 2001. See the Veterans Education and Benefits Expansion Act of 2001, Pub. L. No. 107-103, 115 Stat. 976 (2001). In the meanwhile, please note these important corrections to the advice in the form:
? These changes apply to the section entitled “Appeal to the United States Court of Appeals for Veterans Claims.” (1) A “Notice of Disagreement filed on or after November 18, 1988” is no longer required to appeal to the Court. (2) You are no longer required to file a copy of your Notice of Appeal with VA’s General Counsel.
In the section entitled “Representation before VA,” filing a “Notice of Disagreement with respect to the claim on or after November 18, 1988” is no longer a condition for an attorney-at-law or a VA accredited agent to charge you a fee for representing you.